Dollar continues to decline
July 15, 2008
The dollar today plunged to it's lowest level ever (against the Euro) on continued fears the US faces a major economic downturn because of the collapse of the mortgage market.
Ben Bernanke testified today before Congress about the state of the economy and testified there is uncertainty in the US economy. The stock market did not like to hear this, as the Dow plunged 200 points as investors fear the uncertain future of the US economy. The recent events at Wachovia and the closure of Indy Mac are shedding light on the state of the mortgage industry which continues to get worse. Over the weekend the Treasury announced a plan to save Fannie Mae and Freddie Mac just before the Federal Reserve announced new mortgage rules for high risk mortgages. Agency bond yields continue to increase as investors are not sure the mortgage market will recover any time soon.
There has been no recent word on the bill before Congress that would provide a tax credit to first time home buyers that purchase a new home. If this bill were enacted it would provide a boost to a slow real estate market. Many first time home buyers are waiting on the sidelines because they fear the residential market will continue to decline in value. Wells Fargo remains active in the wholesale market as they continue to provide updates to their mortgage programs.
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